Wednesday

4th May 2016

Eurozone ministers agree to pay Greece €8.3bn

  • Greek MPs passed a new raft of austerity reforms on Sunday, paving the way for the latest bailout payments (Photo: u07ch)

Eurozone finance ministers agreed to pay out €8.3 billion of Greece's bailout package on Tuesday (1 April), bringing to a close a protracted battle between the Athens government and its creditors over the latest round of austerity reforms.

As a result of the agreement, approved at a meeting in Athens as part of Greece's six month EU presidency, Greece will receive a first tranche of €6.3 billion at the end of April that will allow it to meet debt repayments totalling €9.3 billion in May.

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Two further payments to Greece, each of €1 billion will then be made in June and July.

The deal comes more than six months after Troika officials first began their review in September. But the review mission, the fourth of the Greek programme, hit an impasse after the Troika failed to strike a deal with the Greek government on the next round of labour market reforms and spending cuts.

Greek MPs passed a new raft of labour market reforms and cuts to healthcare spending on Sunday.

Dutch minister Jeroen Dijsselbloem, who chairs the meetings of the currency bloc's eighteen finance ministers, said that the deal would ensure that Greece would have no cash-flow problems for the rest of 2014 when the second part of the country's €240 billion bailout comes to an end.

"The programme runs until the end of the year, and we will decide at the end of the year whether any future help is necessary," he said.

For his part, Greek finance minister Yannis Stournaras, is confident that Athens will avoid needing a third rescue package and has indicated that he plans to make the Greek treasury's first foray into the bond market since 2010 by selling selling between €1.5 billion and €2 billion of five-year bonds in the coming months.

There are growing signs that Greek will be able to re-finance itself on the markets. Interest rates on ten year government bonds have fallen to 6.5 percent, down from over 30 percent just two years ago, and within several percentage points of fellow eurozone periphery countries Italy and Spain.

After six consecutive years of recession the Greece economy is expected to grow by 0.6 percent this year, with the European Commission forecasting a 2.9 percent growth rate in 2015.

Later this month, meanwhile, EU statistics agency Eurostat will publish its data on national budgets, which the Greek government hopes will show that the country registered a budget surplus of more than €1.5 billion in 2013.

"I would like to acknowledge the great efforts made by Greece over the past four years to repair the public finances and build a more sustainable model for growth," said EU economic affairs commissioner Olli Rehn.

"The Greek economy is stabilising and is expected a return to growth and recovery in employment starting this year," Rehn said, although he cautioned that Greece must "continue economic reforms, maintain sound public finances and facilitate targeted investments."

But the meeting took place against the backdrop of a high security alert, with the Greek government deploying more than 2,500 police and riot officers to control anti-austerity rallies organised by labour unions.

Meanwhile Dijsselbloem told reporters that ministers would agree on a bailout programme 'exit strategy' for Portugal next month, following the completion of the Troika's final review mission in Lisbon.

EU recovery to slow this year

On just 1.8 percent growth, the commission's forecast is less optimistic than before because of an instable global economy and lack of results of EU reforms.

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